Trang Chủ
One important point to closely follow in the course of implementation of the scheme is “to ensure the legitimate rights and interests of depositors and the rights and obligations of all stakeholders in accordance with the law”, not to cause failures and imprudence to the banking system beyond the State control. In the process of re-organization, consolidation and restructuring of the credit institution system towards minimizing losses and resolution cost of the State Bank of Vietnam”, the restructuring process of credit institutions has been carried out firmly, certainly, prudently but effectively.
Restructuring the people's credit fund (PCF) system, has been implemented in the direction of speeding up, improving prudence and effectiveness in parallel with steady expansion in new rural areas; ensuring their compliance with the Law on Credit Institutions and the Law on Cooperatives; complying with principles on voluntariness, autonomy, self-responsibility, mutual benefit, community cooperation and development towards the goal of supporting the hunger eradication and poverty reduction as well as agricultural and rural areas development and prevention of “black credit”.
One of the highlights in restructuring the people’s credit institution is that the State Bank of Vietnam issued Circular No.04/2015/TT-NHNN, effective from June 1st, 2015 on PCFs, with a lot of turning-points in new provisions including tighter regulations on operation of credit institutions.
Thanks to the advantages such as the understanding of locality, low operating costs, objectives towards assistance to members, the development of the system of people's credit funds is of a special significance in providing capital resources for local economic development, helping many families access to fund for household economic development, reducing “black credit”, thus contributing to common security and social order.
Besides the positive achievements, the people’s credit fund system has still had some shortcomings, such as the monotonous operation of the whole system, untapped potential opportunities, and primary dependence of operation on deposits and loans that may cause risks related to major moral hazards. All the factors are the main causes to difficulties of people's credit funds and risks of failures. In reality, most of the credit funds in problem have arisen from wrong management of their heads such as a deliberate occupation of common property, provision of loans in contrast to the set out principles, causing fund losses or bankruptcy.
Thus, To restructure the system of people’s credit funds to ensure is an important, indispensable task for the its safe and sound development, in order to ensure a the whole system in Vietnam to be thoroughly consolidated.
As an unique deposit insurance organization in Vietnam aiming at focusing on depositor protection, the role of Deposit Insurance of Viet Nam in restructuring the people's credit funds system has been clearly affirmed in the its own operations.
The governments in many countries around the world have considered deposit insurance as a necessary tool to prevent crisis by empowering deposit insurance organization with resolving credit institutions in problem and risk surveillance to better protect interests of depositors. A survey conducted by the International Association of Deposit Insurers on 34 countries has shown that, an deposit insurance organization is an inseparable component of the financial safety net in the nations surveyed. Together with other agencies in charge of surveillance, deposit insurance is a supervision institution which ensures stable development of the banking system and is the only institution in protecting depositors in Vietnam.
The introduction of the Deposit Insurance of Viet Nam is a explicit commitment of the Government to insured institutions and depositors in the regard of deposit insurance’s reimbursement to depositors’ insured deposits in case that insured institution is declared to be terminated and be insolvent. For 15-year history of operation, by making prompt and legitimate reimbursement of insured deposits for 1828 depositors in 39 people’s credit funds with a total amount of 26.78 billion Vietnamese dong , the Deposit Insurance of Vietnam has contributed to reinforcing confidence of depositors and facilitating people's credit funds to raise capital more easily from residents, expanding the size and speeding up capital growth of this type of credit institution. In reality, heads of many people's credit funds have admitted that deposit insurance helped them to overcome difficulties in mobilizing deposits from local people affected by widespread failures of credit cooperatives in the 1990s in Vietnam.
Through on-site examination and off-site supervision for people’s credit funds, the Deposit Insurance of Vietnam has found some mistakes in governance, internal control, capital mobilization, lending, accounting on wrong accounts, management of documents, records and books. The Deposit Insurance of Vietnam has given timely warnings, recommended appropriate measures for the settlement of compliance with the law on deposit insurance and regulations on prudence of banking activities.
Especially in the present, the Deposit Insurance of Vietnam has made positive steps to speed up examination and supervision ofcredit funds in problems, to timely recommend correction measures, avoiding regretful failures, ensuring the legitimate rights and interests of depositors and preventing deposit insurance fraud. Strengthening supervision of ed credit institutions in problem helps deposit insurer to determine accurate amount of insurable deposits, clarify doubtful deposits, build up equal and transparent mechanisms in deposit insurance policy; at the same time detect weak institutions, recommend to the State Bank of Vietnam, contributing to the sound development of the people’s credit funds throughout the country.
Through public awareness programs on policy of deposit insurance, depositors are fully aware of their legitimate rights and interests, feel assured to deposit their idle savings for economic development, helping to reduce gold speculation or participate in “black credit market”, contributing to make credit activities healthy in locality and increasing the capability of capital mobilization of people's credit funds system.
For ed people's credit funds in problem which cause bank runs and affect liquidity, the Deposit Insurance of Vietnam co-holds a customer conference, associated with public awareness activities on policy and regulations on deposit insurance in collaboration with the State Bank of Vietnam’s local branch, local governments, minimizing the psychological chaos that may cause a negative impact to the stability of financial markets, helping to stabilize credit funds.
Thus, the operations of the Deposit Insurance of Vietnam have contributed to, step-by-step, ensuring more and more stable and sustainable growth of people’s credit funds in line with the directions and policy of the Party and the State on restructuring the people’s credit fund system. To further continue reinforcing restructuring as well as enhancing the role of the Deposit Insurance of Vietnam in the coming time , we recommend some ideas as follows:
First, restructuring the local people’s credit funds system requires a close coordination between the State Bank of Vietnam, the Cooperative Bank, the Deposit Insurance of Vietnam and local governments. Eventually, it is necessary to issue specific guidances on tasks and responsibilities of each party in the restructuring process in order to ensure smooth implementation without any negative messes and impacts on local credit activities, especially in case of closing incapable PCFs.
Second, according to the Law on Deposit Insurance , reimbursement of insured deposits can be only undertaken when the insured institutions terminate operation of credit funds in the form of bankruptcy; while there has been no specific guidance on bankruptcy order in accordance to the Law on bankruptcy. In case of people’s credit fund failure, there is no legal basis for prompt payment to depositors. It is suggested that the State Bank of Vietnam soon issue the legal guidance on closure of people’s credit fund in line with the current applicable regulations.
Third, in order to strengthen restructuring and quality of people's credit funds, it is necessary to improve the capacity of governance and management of those funds and strengthen supervision and strict support of the State Bank of Vietnam, the Cooperative Bank and the Deposit Insurance of Vietnam.
